Buying your first car is very exciting, but buying car insurance for the first time can be stressful. The good news is that it doesn’t have to be. These tips will help you confidently select a policy for your new wheels.
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How to Get Car Insurance for The First Time
Doing a little research will help make the process of buying car insurance more manageable, and it can save you some money.
- Personal Information. You’ll need a lot of personal information to fill out insurance forms. This information includes your driver’s license number, date of birth, address, occupation, marital status, education level, and driving history. If you were previously on your parent’s auto policy, you’d want that insurance data, too.
- Vehicle Information. If you’ve picked out your new vehicle, make sure you have the year, make, model, vehicle information number (VIN), and mileage information.
- Required Auto Insurance. Each state has different requirements for auto insurance, so you’ll have to determine what your state requires for minimum auto insurance coverage and ensure you get at least that amount.
- Desired Auto Insurance. For some people, the minimum insurance is enough. For others, it’s not; they may want to add more coverage and different policies. Understanding your options and deciding what you want is part of the equation.
- Get Quotes. Once you know what you need and want, it’s time to comparison shop.
Your Parents’ Car Insurance Might Not Be the Best for You
For some people, getting on their parent’s car insurance policy is the best way to go and can lead to significant discounts if they’ve got a great history with their insurance company. But not everyone fits into that category, and you might benefit from separating yourself from your parent’s car insurance, especially if they’ve had a few accidents or insurance claims.
Why Is Car Insurance So Expensive for Young Drivers?
In most situations, a person getting car insurance for the first time is often someone with less experience. Unfortunately, if you find yourself in that situation, you’ll pay more for your insurance than someone with a clean, lengthy driving history. When producing quotes for prospective policies, insurance providers rely on history to dictate how likely one is to get into an accident. Because less experienced drivers pose a higher risk, they generally pay more.
You can consider a few things if you want to see a drop in premium prices. Buying a different vehicle can make a change. Additionally, being an honor student and establishing good credit can also help reduce the price of your auto insurance. Unfortunately, this often plays against younger drivers who may be unable to purchase a new vehicle or establish credit.
It doesn’t seem fair that the same insurance for the exact vehicle can be more expensive for younger drivers who have a lower income than it is for older drivers with a higher income. There is a reason for this, and it makes sense when you think of it from the insurer’s point of view. Their rates rely on risk assessments. A new driver without much experience is a higher risk and is more likely to file a claim. Older drivers with a long and clean driving record are a lower risk.
Another factor that plays against younger drivers is their credit history. Insurance companies have found that people with low (or no) credit scores are more likely to file an insurance claim. Because younger drivers haven’t had much time to establish and build a credit history, they tend to have lower scores.
Types of Car Insurance
There are many different types of car insurance, and they’re all designed to cover different things. Some insurance plans won’t have all the coverage you want. In those situations, selecting add-ons can ensure that you don’t have any coverage gaps.
In most states, the minimum legal requirement supposedly protects others and covers their losses if you are at fault. If you have a car loan, you’ll find that the lender requires more insurance than the state because they also want protection for your vehicle. The most popular types of auto insurance coverage are liability, collision, and comprehensive.
Liability Coverage
Liability covers bodily injury and property damage to other people. Most states require this auto insurance except New Hampshire and Virginia. While New Hampshire doesn’t require any auto insurance, they do require that you can prove you’re able to meet minimum financial responsibility requirements. Virginia has a minimum insurance requirement. However, you can opt out of it if you pay an Uninsured Motor Vehicle fee.
Most others need to have liability insurance. It pays others for any damage you cause to their property or the physical harm you inflict on your vehicle.
Collision Coverage
No states require collision coverage, but lenders often require it, and it’s a good idea to have this protection. This coverage is helpful if you’re at fault and hit an object or another vehicle and your auto is damaged.
Comprehensive Coverage
Comprehensive auto insurance is another coverage not required by any state, but it’s a good idea, and a lender might require it. This insurance covers damage to your vehicle not caused by a car accident. Typically, you can use comprehensive coverage if you hit an animal, there’s a fire, theft, or vandalism, or if your auto is damaged by a falling object, like a tree.
When Do I Need to Buy Car Insurance for the First Time?
The best time to buy car insurance is before purchasing or driving your vehicle. Because insurance is required in most states, it would be illegal for you to even go home from the car dealership without insurance.
If you’ve pre-selected an insurance policy, you can arrange to have it begin on the day you buy your vehicle, so you’re confident you’re driving with coverage.
Finding Cheap Car Insurance for First-Time Drivers
Most first-time auto insurance purchasers face high car insurance rates. The reason is the risk involved with insuring young people. You can try to get cheap car insurance by shopping around, raising your deductible, buying only the minimum insurance, bundling insurance plans, getting better grades, and establishing a good credit history.
Once you have insurance and have been driving for a while, you might want to shop around again to see if you can get a better deal now that you have an established driving history.
Can I Buy Car Insurance at the Dealership?
If you buy a car from a dealership, there’s a good chance that you can purchase insurance through the dealership, too. It’s convenient, but it can be more expensive if you go this route.
How to Shop for Car Insurance
You’ll need to comparison shop to get a deal on auto insurance. If you know what insurance you want, you can ask many different insurance companies to give you a quote. Make sure they’re all quoting the same coverage levels, so you’re making a fair comparison.
Selecting the Right Amount of Coverage
The right coverage differs from person to person and can change based on the vehicle. You’ll first want to ensure you get the insurance your state requires. Next, if you are financing your car, the lender may have some insurance requirements you’ll have to meet. Finally, consider your circumstances and what coverage would make you feel most comfortable.
Improving Factors That Affect Insurance Rates for First-Time Drivers
If you’re a brand-new driver, you’ll have higher rates, but you can get proactive and look more reliable to the insurance company. This can include taking a defensive driving course, improving your grades, boosting your credit score, looking for other discounts, buying a used vehicle, combining policies, and always driving safely.
After proving that you’re a good driver and a safety risk, you might be able to call an agent or representative to review coverages and available discounts to ensure you are getting the best possible rate. If you still cannot obtain an affordable rate, you can also shop around and potentially find a better deal elsewhere.
Find Cheap First-Time Car Insurance in Your Area
Just like car insurance requirements vary from state to state, you may find that the prices also are regional, affected by your state, and can change according to your ZIP code. In addition to the no-insurance options offered by New Hampshire and Virginia, some states don’t assign blame for accidents. They call this no-fault insurance, and it can also affect your rates.
You can adjust your coverage to find an affordable rate if you meet your state’s minimum auto insurance requirements. This might mean dropping some coverage or lowering your limits. Raising the deductible can give you a significant discount, too. Finally, it always pays to compare prices to find the best rate.